Understanding what is going on inside the mind of the home seller will be an advantage to a buyer. Ok, maybe it sounds like a Sci-Fi plot, but it’s not. One of the misconceptions new buyers have is that negotiating a home sale is all about the price. While it certainly is the main concern for both parties, there are other considerations that influence a home seller’s acceptance of an offer.
Understanding the Home Seller
Understanding and using some of these other factors, or a combination of them, to your advantage, may be the secret to winning out over other buyers:
Deposit: The Deposit is necessary to have a completed, legal contract in Maryland. The amount is negotiable, but generally, the higher the amount, the better the buyer appears to a seller. In a day when financing has tightened, and sometimes deals fail because a buyer ends up unable to get their financing in the end, a higher deposit amount can signify to a seller that this is a buyer who is more likely to be qualified.
Closing Date: There are many reasons to sell. Sometimes the sellers have moved already for a job, or maybe they have found their next home and want to settle as quickly as possible. By offering a closing date that is as soon as possible, a buyer can receive a more favorable response from the seller.
On the other hand, if the seller lives in the home and has to find his next home purchase, the buyer will want to give the seller enough time to find another home. Being flexible about the date is to a buyer’s advantage. Either way, a skilled buyer’s agent can help you craft the right offer for any situation.
Financing: The buyer’s financing is something the seller is going to be very concerned about. When you present an offer, you must have a pre-qualification letter with it. Make sure your pre-qualification is with a strong local lender. This speaks well of your ability to perform on a contract to buy the home. Stay away from internet lenders!
Even better is the “pre-approval letter”. Taking the time to go through the approval process before you even contract on a home is always advisable if you can do it. The approval letter will trump the “pre-qualification” letter most days.
Contingencies: Generally, in a seller’s market, the more contingencies loaded into an offer, the lower the chances of acceptance. In a market with low inventory and healthy demand, buyers will be in competition. If you have a home on the market for sale, and you’re looking for your next home, it’s almost always best to have your home under contract and present a house-to-settle contingency, rather than a house-to-sell contingency. The timing can be unsettling, but if you can have a little faith, it’s often the best scenario.
Motivation: Sellers have all kinds of motives for placing their home on the market. Although it would be a negligent listing agent that would spill the
beans about their seller’s motives to everyone, sometimes a good Frederick buyer’s agent can get the scoop.
Sometimes, the motivation is obvious: If the seller has been on the market for 2 years, has burned through 3 agents, but has not lowered their price…chances are, they’re not very motivated. Sometimes sellers need to be “educated” by the market to come to realize the true market value of their home. Sometimes, they have their minds made up, and there is no chance of changing it.
If the seller is relocating, or under some other type of motivation, these are good things for a buyer’s agent to find out. Sometimes the stars align, most of the time real estate agents do their jobs and make the stars align!
Ability to Negotiate: Both buyers and sellers should be willing to negotiate and should come to the transaction with a certain level of open-mindedness and flexibility. But sometimes we find that some people just aren’t very flexible. If you find a seller with this mindset, sometimes it signals a difficult transaction ahead. In this case, the buyer needs to decide how badly they want THAT house. If there are other contenders in the market, you might want to move on.
Likewise, if a seller doesn’t have much room to negotiate on price, as we often find in today’s market, then the buyer needs to understand that. This will help with establishing the right expectations from the start.
Negotiating on real estate turns out to be much more nuanced than agreeing on a price. There are contingencies, home inspections, financing, time-frames, and much more. Using an experienced Buyer’s Agent is the start to a successful real estate transaction for today’s buyers.
Contact the Highland Group to learn more about Buyer Agency in Maryland, and put us to work. We’d love to help you make Frederick home.